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05.25.11

The Securities and Exchange Commission on Wednesday approved rules that allow whistleblowers to claim cash rewards for information their employers pass on to the agency, striking a balance meant to encourage employees to come forward while protecting the integrity of internal compliance programs.

The rules flesh out a Dodd-Frank Act provision that provides huge financial incentives for people to report securities fraud to the SEC. Several major companies and corporate lawyers had argued for a regulation that would require employees to report problems through internal compliance programs to be eligible for a reward — which, under the law, could amount to as much as 30% of a penalty of more than $1 million collected by the commission.